Is Austrian stamp duty still in force?
Which transactions are subject to stamp duty in Austria?
When is stamp duty triggered?
Does Austrian stamp duty apply if the agreement is entered into between non-Austrian entities?
Is it possible to stipulate that the other party is liable to pay any stamp duty?
Must there be stamp duty warnings on the first page if the originals are safely stored outside Austria?
Can emails be sent to Austria when dealing with a stamp duty sensitive transaction?
Is it advisable to simply pay stamp duty?
Is avoidance of Austrian stamp duty considered tax evasion and are there penalties for non-payment?
Are there any strategies to avoid stamp duty besides executing and keeping documents outside of Austria?
Is Austrian stamp duty still in force?
While it has its origins in the Habsburg monarchy, the Stamp Duty Act (SDA) is still in force as of today, despite banks' repeated calls for its abolishment.
There have been various changes to the scope of the SDA in recent years, including, most importantly, the abolishment of stamp duty on loan agreements and credit agreements in 2011 and on residential lease agreements in 2017.
Which transactions are subject to stamp duty in Austria?
The SDA contains an exhaustive list of legal transactions that are subject to stamp duty in Austria if certain legal prerequisites are met. The most relevant legal transactions are:
- lease agreements (eg, aircraft lease agreements);
- sureties and "non-abstract" guarantees (eg, parent company guarantees or guarantees typically contained in, or ancillary to, loan agreements);
- out-of-court settlements;
- assignments (including security assignments); and
- potentially, novations.
The amount is in each case a certain percentage (ranging from 0.8% to 2%) of the basis of assessment.
Stamp duty is triggered only if two conditions are met:
- a written deed on a stamp-dutiable legal transaction within the meaning of the SDA carrying the signature of (at least one of) the contractual parties is established; and
- there is a specific nexus to Austria.
Such a written deed may be:
- the contract (undertaking) by which the stamp-dutiable transaction is concluded; or
- any other signed written document evidencing the stamp-dutiable transaction (ie, containing a reference to the essentials of such transaction), known as "substitute documentation".
A stamp-dutiable transaction has an Austrian nexus if the written deed is:
- signed in Austria; or
- has a specific other tie to Austria if it is signed abroad.
Even if these two conditions are met, the parties may still benefit from certain exceptions set out in the SDA. For instance, certain types of assignments are exempt, including:
- assignments among credit institutions;
- assignments that (exclusively) secure obligations under credit agreements; or
- certain assignments made in the context of factoring framework agreements.
Does Austrian stamp duty apply if the agreement is entered into between non-Austrian entities?
If the established written deed on a legal transaction that is subject to stamp duty has a specific nexus to Austria, stamp duty can also fall due if the contracting parties are non-Austrian entities. To be more precise, according to section 16 of the SDA, an Austrian nexus exists where:
- a written deed on a stamp dutiable legal transaction is signed in Austria;
- a written deed on a stamp dutiable legal transaction is signed outside of Austria and all contracting parties to the respective legal transaction have their residence, habitual abode, legal seat, place of management or a permanent establishment in Austria and:
- the legal transaction is related to an asset that is located in Austria (eg, an Austrian real estate); or
- at least one party to the legal transaction is entitled or obliged to a contractual performance in Austria (section 16(2)(1) of the SDA);
- a written deed on a stamp-dutiable transaction is signed outside of Austria and the written deed or a certified copy thereof is brought into Austria and:
- the legal transaction is related to an asset that is located in Austria (eg, an Austrian real estate); or
- at least one party to the legal transaction is entitled or obliged to a contractual performance in Austria; or
- a legal action (eg, collection, deferral, termination or any notice based on the contract) is pursued in Austria based on the written deed or a certified copy thereof or official use is made of the written deed or a certified copy thereof (eg, submission to a court or an authority) (section 16(2)(2) of the SDA).
Here are two examples of how stamp duty could be triggered in the context of a lease agreement:
- example one – two German companies conclude a lease agreement in Germany concerning an asset located in Austria. The lease agreement or a certified copy thereof is brought into Austria. The stamp duty arises when the deed is brought into Austria.
- example two – two German companies conclude a lease agreement in Munich concerning an asset located in Munich. The lease agreement is subsequently brought into Austria. Later, the lessee gives notice of termination of the lease agreement to the lessor in Vienna. At that point in time, the stamp duty is triggered.
Is it possible to stipulate that the other party is liable to pay any stamp duty?
The contacting parties may always agree that one party is liable to pay stamp duty once triggered. However, this does not prevent the tax authorities from claiming the stamp duty from any party that is considered to be a tax debtor in the specific transaction – usually, all parties to transactions that are stamp-dutiable are tax debtors within the meaning of the SDA.
For this reason, it is usually in the interests of all contracting parties that a stamp duty avoidance structure is chosen (eg, by signing and keeping all stamp duty sensitive documents abroad and creating awareness by inserting a stamp duty warning on the first page of all relevant documents).
Must there be stamp duty warnings on the first page if the originals are safely stored outside Austria?
The real risk lies not with the actual original document (which can be stored in a safe) but with the so-called "substitute documentation", which may also trigger stamp duty. Substitute documentation may consist of another agreement or even simple correspondence that contains an express reference to an underlying stamp-dutiable legal transaction. For instance, a signed notice to a debtor informing the debtor of an assignment may constitute substitute documentation. Once a document constitutes substitute documentation, the same stamp duty precautions must be taken as for the original document (which usually entails signing and keeping all relevant documents outside of Austria). This may be an operational risk to be aware of, especially in the case of long-term agreements. The only good news is that a legal transaction will not trigger stamp duty more than once, no matter how many substitute documents are created.
Can emails be sent to Austria when dealing with a stamp duty sensitive transaction?
The term "deed" as it is used in the SDA not only comprises any form of paper documents, but also telefax or email messages, provided that the respective communication medium evidences a stamp-dutiable transaction and carries a signature. In the case of email messages, the Supreme Administrative Court has even held that not only paper but also a screen may serve as medium on which a deed may be displayed, provided that all other legal prerequisites are fulfilled. In other words, emails do not even need to be printed out in order to potentially trigger stamp duty.
Thus, the sending of emails in connection with stamp duty sensitive transactions also requires special attention. The position of the Supreme Administrative Court still appears to be that even opening a stamp duty sensitive document on a smartphone while on a skiing vacation in Austria could trigger stamp duty – albeit rather an extreme view.
Is it advisable to simply pay stamp duty?
This is an option. However, it is not market practice in large transactions to pay stamp duty to the Austrian tax authorities as many deals would no longer be commercially viable if stamp duty amounts were factored into the transaction costs. Typically, the parties agree to implement a structure that mitigates the stamp duty risk.
Is avoidance of Austrian stamp duty considered tax evasion and are there penalties for non-payment?
Not drawing up a deed (or keeping a deed outside of Austria) in order to avoid the payment of stamp duty is legitimate and does not constitute tax evasion. If, however, a deed does trigger stamp duty, its non-payment may lead to a penalty surcharge of up to 100% of the initial stamp duty amount.
Are there any strategies to avoid stamp duty besides executing and keeping documents outside of Austria?
One alternative stamp duty avoidance strategy commonly used is the "offer and implied acceptance" structure where the offeror formally signs an offer setting out all conditions of a transaction, which states that it may be accepted by the offeree only impliedly through a certain behaviour or action, such as by making payment to a specific bank account within a specified period of time (written offer accepted by implied consent). Thus, under Austrian civil law the agreement is validly concluded by implied acceptance without the execution of a deed. By contrast, the oral acceptance of a written offer triggers stamp duty if such oral acceptance is documented in written form; such documentation will then be regarded as a deed.
Likewise, the video recording of an agreement concluded orally will not trigger stamp duty given the lack of a written deed but this is rarely an option in practice. By contrast, minutes in writing on the oral conclusion of a stamp-dutiable agreement that are signed by one party or a third person (present at the transaction) are considered a deed.
Finally, so-called "attorney's correspondence" – which is a written report by an attorney to their own client about the oral conclusion of a legal transaction by the respective attorneys of the contractual parties – does not trigger stamp duty as it is signed by only one party (the attorney representing the party) and is not handed over or sent to the other party (or a third person). However, these reports may serve as evidence of the actual conclusion of the underlying agreement. When choosing this method, a final version of the stamp-dutiable contract is prepared, but not signed by the contractual parties. By concluding the contracts in oral form, no written deed is established.
In all cases, even if no written deed is established, stamp duty may always be triggered subsequently through substitute documentation, such as written correspondence between the contracting parties.
For further information on this topic please contact Wolfram Huber at PHH Rechtsanwälte by telephone (+43 1 714 24 40) or email ([email protected]). The PHH Rechtsanwälte website can be accessed at www.phh.at.